Reuters: “China has halved the quantum of shale gas it expects to produce by 2020 after early exploration efforts to unlock the unconventional fuel proved challenging, according to an industry website and a government source.”“China, believed to hold the world’s largest technically recoverable shale resources, is hoping to replicate the shale boom that has transformed the energy landscape of the United States.About four years of early evaluations and drilling have so far yielded one large find – Fuling field – in the most prospective gas province of southwest Sichuan, but experts say the Fuling success is hard to repeat due to complex geology and high cost of production.
Citing Wu Xinxiong, the head of China’s National Energy Administration, industry website www.cpnn.com.cn reported that China aims to pump 30 billion cubic meters (bcm) of shale gas by 2020, versus an earlier goal of 60-80 bcm mapped out in 2012.
“The previous targets were more of a vague prospect, a hope. 30 bcm is a more realistic goal,” said a government source who was briefed on the new target.
The revision, which is pending government finalization, would be negative for oil service sector companies that were hoping to cash in on the major drilling activity needed to reach the earlier target.
….The new 30 bcm shale gas target would mostly be contributed by the country’s top two state oil firms, PetroChina (0857.HK) and Sinopec Corp (0386.HK), experts have said, as they hold the majority of the country’s oil and gas blocks, as well as the expertise.
The government’s efforts, led by the Ministry of Land and Resources, to open up the shale gas sector to independent players have had small success, as the blocks the ministry has to offer are of poorer quality and would entail hefty exploration costs.
Attempts by international firms to participate in the shale gas development have not been wholly fruitful either, with Royal Dutch Shell (RDSa.L) and Hess Corp (HES.N) the only foreign firms that have landed production sharing contracts, while most of them, including Exxon Mobil (XOM.N) and BP (BP.L), have barely progressed beyond the preliminary stage of studying the blocks.”